Can Globalization Come Clean?

Jan. 19, 2007
It's easy to get caught up in day-to-day transactions and efforts to optimize your supply chain and forget that logistics is at the front line of a remarkable

It's easy to get caught up in day-to-day transactions and efforts to optimize your supply chain and forget that logistics is at the front line of a remarkable revolution in world trade. The legacy of that revolution will depend in part upon how the logistics profession conducts business over the next decade.

Political thinker and economist David Ricardo (1772-1823) was the theoretical father of the free trade and globalization movement that has made incredible progress in lowering tariffs, subsidies and other international trade barriers over the past 50 years. Ricardo's theory of comparative advantage demonstrated why it's beneficial for two regions or countries to trade goods. Even if one can produce everything more efficiently than the other, each benefits by specializing in what it does best.

Ricardo's theories of beneficial trade depend upon a low-cost and reliable global transportation network. Such a network never truly existed until recent times. Maintaining and improving the millions of segments of that network is what logistics managers do every day, thus allowing their companies and their countries to reap the benefits of today's more open international markets.

Of course there are still plenty of trade barriers. Removing these barriers is a perennial topic at the globalization movement's annual love fest that takes place this month in Davos, Switzerland. More than 2,000 political and business leaders, celebrities and their hangers-on will converge on this mountain town for the World Economic Forum's annual meeting. As threatening as it is for many of these elites, this year's agenda, "The Shifting Power Equation," will reportedly address some of the fundamental changes taking place in the world economy, including the growing prominence of emerging economies and the increasing leverage of commodity suppliers (such as petroleum producers).

At the same time as the meeting in Switzerland a counter-event is being held in Nairobi, Kenya. Organizers of the World Social Forum expect to draw tens of thousands of people who the media will paint as being anti-globalization militants. But like the Davos crowd, there will be more diversity of position and opinion here than first meets the eye. In addition to addressing free-trade agreements, debt and labor concerns, the topics on the agenda in Nairobi include HIV-AIDS, women's issues, migration and housing.

These are all huge, important multinational challenges impossible to address in isolation and worthy of collective action. The problem with the"global capitalism is evil" point of view held by many in this crowd is that it equates all economic growth with exploitation and tends to idealize the hand-to-mouth existence of people around the world. Such paternalism is grossly unfair to the hundreds of millions of people who deserve something better.

On the other side, in addition to turning a blind eye toward the social and environmental costs of multi-billion dollar development projects, a major problem with the "global capitalism is great" crowd is the failure to acknowledge the impossible-to-repay debt that many developing countries have deliberately been stuck with by greedy dictators (past and present) and the ruling classes enabled by smug global financial institutions like theWorld Bank. There's no ethical reason why nations with extensive petroleum reserves and other natural resources should struggle to feed and provide basic healthcare to their people. All of these issues fall into the gap between Ricardo's basic theory about the benefits of free trade, and a world of unequal trading partners, vested interests and unintended consequences.

It would be impossible to put the globalization genie back in the bottle. The benefits are simply too great for too many. At this stage in the game the answer to the question of whether globalization can come clean and fulfill its promise to people being touched by unprecedented economic opportunities in emerging nations depends in no small measure upon the individual actions of global logistics professionals.

Key decisions that you will make this year, whether you're identifying or checking on the activities of foreign suppliers, or lining up global transportation partners, will play a key part in the morality of global trade. Open your eyes, let your conscience be your guide, and remember the ideals of personal freedom and respect for the individual upon which America was founded.